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Cash ISAs biggest ever year – what’s next for 2024?

More money went into Cash ISAs in 2023 than any year since their creation. We look at why, and what 2024 could have in store for Cash ISA savings.
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Important information - This article isn’t personal advice. If you’re not sure whether an investment is right for you please seek advice. If you choose to invest the value of your investment will rise and fall, so you could get back less than you put in.

The Cash ISA market grew by nearly £50bn in 2023.

It’s the biggest movement into Cash ISAs in a calendar year since they were created in 1999, and 100x more growth than 2022.

Why have Cash ISAs grown so much?

In short, savings tax became a problem.

A Cash ISA lets you save up to £20,000 every tax year as part of your overall ISA allowance, without paying any tax on the interest you earn.

Historically low interest rates and a generous Personal Savings Allowance caused Cash ISAs to dwindle.

But people who took advantage of higher rates in 2022 saw their interest catch up with their allowance.

As more people began paying savings tax, more money flooded into Cash ISAs.

This article isn’t personal advice. Inflation reduces the future spending power of money. If you’re not sure if something’s right for you, seek advice. ISA and tax rules can change, and benefits depend on your individual circumstances.

What’s next for Cash ISA in 2024?

The 2023/24 tax year is set to be the biggest for Cash ISAs on record.

In the first 10 months of the 2023/24 tax year, £29bn was moved into Cash ISAs.

It’s far more than the same period in the last 20 years, and we don’t expect those volumes to slow down over the next few months.

It’s because many of the factors that caused money to rush into Cash ISAs last tax year have been exaggerated.

Savings rates have continued to climb. Pushing more people even closer to, or above, their Personal Savings Allowance. In fact, millions of savers are set to pay tax on their savings this year.

Plus, despite peaking late in 2023, fixed Cash ISA rates are even more attractive than they were 12 months ago. Not to mention 4% higher than two years ago.

Cash ISA – two-year fixed rates

Source: Bank of England, 01/01/2024.

Picking a Cash ISA this tax year

As with picking any savings account, the Cash ISA you choose should reflect your needs.

For money you need at your fingertips, you could look to easy access (variable rates with unlimited access to your money). Or the slightly higher rate-paying limited access (variable rates, but you can withdraw a limited number of times per year without a charge).

Any money you can afford to lock away could go into a fixed-rate Cash ISA. You’ll probably get a better rate in return, but usually can’t withdraw your money until the term ends. Money withdrawn from a Cash ISA will lose its ISA status.

This tax year, you can only pick one Cash ISA at one provider, which means committing to a decision.

But the Cash ISA lets you spread money across fixed-rate, easy-access, and limited-access products. All offered by different banking partners.

Through one login, you can switch as much as you’d like throughout the tax year – without paying any charges.

Products can be added or withdrawn at any time.

The Active Savings service is provided by Hargreaves Lansdown Savings Limited (company number 8355960). Hargreaves Lansdown Savings Limited is authorised by the Financial Conduct Authority under the Electronic Money Regulations 2011 with firm reference 901007 for the issuing of electronic money.

Hargreaves Lansdown Asset Management Limited and Hargreaves Lansdown Savings Limited are subsidiaries of Hargreaves Lansdown plc (company number 2122142).

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Written by
Guy James
Guy James
Personal Finance Writer

Guy is a savings specialist, passionate about encouraging people to get to grips with their cash. An integral part of our Active Savings team, he aims to help as many people as possible secure their financial safety net, and make more of their cash.

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Article history
Published: 20th March 2024